What Is a Family Guarantor?
For homebuyers who need to improve their borrowing position, adding a family guarantor to the application provides a big boost. A family guarantor is related to the home loan applicant. Ideally, the homebuyer will add their parents. A qualified guarantor owns their home. If their home still has a mortgage, it’s best if the amount is little. A guarantor places their home as collateral. This helps defray the risk that the lender faces with the first-time homebuyer.
First-time homebuyers often lack credit history, employment, and a 5-20% deposit. The Australian government was first-time homebuyers to become homeowners. Therefore, they offer grants and other help. In addition, they make residential mortgages the safest lending instrument. The government helps lenders recoup their losses. This allows lenders to make exceptions to home loan requirements.
A family guarantor puts their home on the table. They also find themselves on good financial footing. When the homebuyer applies and places the guarantor on the application, the lender evaluates both parties. If everyone checks out, the lender offers loan terms to the homebuyer.
Guarantors improve an applicant’s borrowing power and capacity. It’s possible to borrow up to a 105% loan-to-value ratio with a guarantor. The extra 5% helps the borrower invest in their new home or consolidate outstanding debts.
Mortgage House loan specialists have experience helping first-time homebuyers become homeowners. You can also try our online mortgage calculator with no strings attached.
Family Guarantor Conclusion
Placing a family guarantor on a mortgage application is a helpful strategy. Our Mortgage House loan specialists walk you through the process. Start the application with us today.